The Virtualization of Experiential Events : Effects on Platform Users

A powerful trend in the past few years, accelerated by the recent COVID-19 pandemic, is the movement of social activities from in-person events to digital platforms. There is considerable debate about the limits of this virtualization. In particular, the question of whether virtual events on digital platforms can offer an effective substitute for settings that involve rich experiences such as concerts and races remains unanswered. We explore the impact of offering such virtual events on the users of the hosting platform in the context of racing. By leveraging the theme of the virtual races and users’ zodiac sign as instruments, we are able to estimate the causal impact of virtualization. We find that a virtual race increases the tenure of new users by 42.8 days and the number of running records (representing their engagement) by 24.2%. In addition, we find that virtual racing can complement the offline channel by encouraging new users to participate in more offline races. Finally, further analysis reveals that social interactions enabled by the digital platform play a critical role in realizing the benefits of event virtualization